Re-Engineering Michael Hammer’s Legacy

Michael Hammer died last week, at the sadly young age of 60. He made Time Magazine’s Top 25 Most Influential people in the mid-90s.

His name will (rightly) always be associated with the concept of business re-engineering. For me, it was one of those brilliant insights that you instantly “got” when you heard it, along with the spreadsheet, competitive strategy and the Byrds’ Mr. Tambourine Man.

There will be many articles written eulogizing Hammer, and he deserves every one. I’d like to touch on one small point: how a great idea can be misused by those who come later.

His insight was simple, yet profound. The Industrial Revolution worked by specialized division of labor. But at scale, specialization creates massive vertical bureaucracies. Re-engineering looked at processes, not tasks. Shift focus from marketing and production to order fulfillment and supply chain management. Hammer took a vertically organized world and saw a need for the horizontal. The impact of that simple insight has been enormous.

Then came the perversions.

Stage 1. Re-engineering became associated with downsizing. Redesign the company to get rid of workers and enhance shareholder value. Hammer’s work was used to justify the Gordon Gekko era of excesses. As the Wall Street Journal put it:

“It is astonishing to me the extent to which the term re-engineering has been hijacked, misappropriated and misunderstood,” Hammer told Time, saying that ideally, re-engineering should promote greater production and create more jobs.

Hammer may have originally been a bit naïve about the difficulty of getting people to change, though not for long; he became quite articulate about it.

Re-engineering survived the era far better than some dot-coms and i-bankers. But today, it faces another misuse—and again, it’s a misuse that dehumanizes business. It’s the belief that viewing the world through process lenses is an end, not a means.

The process revolution has been massively successful. Originally applied to manufacturing, we now see it in HR, in non-profits, and in education. I would argue we saw it at scale in the recent financial markets’ breakdown (see my post on the view 12 years before the subprime mortgage meltdown )

The process view has been used to maximize efficiency by expanding scale. The more you can break things out into modules by redefining out-sourceable processes, the more you can achieve scale by specializing modular components and outsourcing them at larger scale. That lowers costs, makes markets bigger and more fluid, and in theory makes for less risk.

But it seems to come at one big cost—the cost of integration. Ironically, this is similar to the flaw Hammer saw in the vertical organization—the left vertical silo didn’t know what the right vertical silo was doing. And didn’t much care.

In the mortgage debacle, the mortgage sales origination process didn’t know what the asset securitization process was doing with the mortgages. And didn’t much care.

There is risk in fragmentation. When no one has a stake in the entirety of a system—no owner, no customer, no regulator—things can go a little crazy, whether you’ve organized vertically or by processes. One answer is, “the market’s invisible hand takes care of that.” But we’re not buying that answer anymore. Markets don’t look omnipotent when Fannie Mae and Freddie Mac are getting taxpayer bailouts.

I didn’t know Hammer, so I welcome comments from those who did. Me, I like to think he was perfectly aware of this issue, and was in his own way working back to rescue the humanistic intent of his original insight—to make organizations work better for the sake of all constituencies, thereby transforming human relations.

Not just more efficient businesses. Not just means, but ends.

I hope that ends up being Hammer’s legacy.

2 replies
  1. Derril Watts
    Derril Watts says:

    Charles.. 

    I couldn’t agree with you more.  It’s interesting how we are finally recognized for who we really are and what we really accomplish only after we pass. Michael Hammer’s impact on the way we do business, both in the commercial as well as the government sectors, will be felt for a generation or more.

    I have taught and consulted with hundreds of organizations around the world for over 20 years and have yet to see a situation where Hammer’s focus on process was not only relevant, but critical to their success. With all of the talk that Reengineering is dead, long live six sigma, we have really missed the point. Reengineering in of itself was never the point, performance improvement was. Reengineering was never solely about IT, but most relegated it to the offices of the CIO. As Hammer said on so many occasions, it’s about giving people more of what they need to become better at what they do!

    I will miss his limitless drive to improve our work and our lives.

    Mike, your family will always be in our thoughts and prayers. 

    We have lost a true warrior!

    Derril Watts
    President and CEO
    Mountain Home Training & Consulting, Inc.
    http://www.mhc-net.com

    Reply
  2. Charles H. Green
    Charles H. Green says:

    Derril,

    I downloaded Hammer’s original Re-engineering the corporation on Kindle yesterday for a long flight to Phoenix today; and your point shines through.  He was very clear, it was about improving the performance of business for the benefit of all its stakeholders. 

    Re-reading, it’s surprising to me how well it holds up.  Maybe it shouldn’t be surprising. 

    Thanks for your thoughtful words.

    Reply

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